More Nigerian lenders expected to tap debt markets

Citigroup, which helped arrange Eurobonds for Zenith Bank and Diamond Bank, sees more Nigerian lenders tapping debt markets to take advantage of low rates and the availability of funds.

“I expect more banks to go to the market this year or in the future to take advantage of the lending opportunities in the market,” Omar Hafeez, chief executive of the New York-based bank’s Nigerian unit, said in a July 11 interview in Lagos. “There’s need for them to get long-term dollars from the capital market or by syndication.”

Nigeria’s banks are accessing Eurobond markets to prevent a mismatch between short and long-term assets as they help fund power, oil exploration and manufacturing projects. Diamond Bank issued a debut $200-million five-year Eurobond, priced to yield 8.75%, in May after Zenith, the nation’s second-biggest lender, sold $500-million of five-year notes as part of a $1-billion global medium-term program.

Citigroup expects “substantial growth” in revenue over the next three to five years, Hafeez said, as capital market activities and electronic banking increase in Africa’s largest oil producer. The US lender may also expand in mortgage and consumer banking over the next five years as it seeks to tap a Nigerian market with more than 170-million people, he said.

“The assets side of retail banking is a target area for us, but it requires some milestones such as a sufficient legal system, a credit bureau and an identification system for a wide take off,” he said. “We look at countries over a long-term period.” – Bloomberg

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